FINANCIAL MANAGEMENT COURSE- MMHA6160
week-2 assignment -finance
3.5 Brandywine Homecare Homecare, a not-for-profit business, had revenues of $12 million in 2011. Expenses other than depreciation totaled 75 percent of revenues, and depreciation expense was $1.5 million. All revenues were collected in cash during the year and all expenses other than depreciation were paid in cash.
a. Construct Brandywine’s 2011 income statement.
b. What were Brandywine’s net income, total profit margin, and cash flow?
c. Now, suppose the company changed its depreciation calculation procedures (still within GAP)
such that its depreciation expense doubled. How would this change affect Brandywine’s net
income, total profit margin, and cash flow?
d. Suppose the change had halved, rather than doubled, the firm’s depreciation expense. Now,
what would be the impact on net income, total profit margin, and cash flow?
4.5 Consider the following balance sheet:
Best Care HMO
June 30, 2011
Net premiums receivable 821
Total current assets $3,945
Net property and equipment $5,924
Total assets $9,869
Liabilities and Net Assets
Accounts payable-medical services $2,145
Accured expenses 929
Notes payable 382
Total current liabilities $3,456
Long-term debt $4,295
Total liabilities $7,751
Total liabilities and net assets $9,869
a. What is BestCare’s net working capital for 2011?
b. What is BestCare’s debt ratio?
4.6 Consider this balance sheet
Green Valley Nursing Home, Inc.
December 31, 2011
Cash $ 105,737
Net patient accounts receivable 215,600
Total current assets $ 608,992
Property and equipment $2,250,000
Less accumulated depreciation 356,000
Net property and equipment $1,894,000
Total assets $2,502,992
Liabilities and Shareholders’ Equity
Accounts payable $ 72,250
Accrued expenses 192,900
Notes payable 180,000
Total current liabilities $ 445,150
Long-term debt $ 1,700,000
Common stock, $10 par value $ 100,000
Retained earnings 257,842
Total shareholders’ equity $ 357,842
Total liabilities and shareholders’ equity $ 2,502,992
a. How does this balance sheet differ from the one’s presented in Problem 4.5?
b. What is Green Valley’s net working capital for 2011?
c. What is Green Valley’s debt ratio? How does it compare with the debt ratios for Sunnyvale and BestCare?
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